Complainant took signed cheque from house of accused - Accused had lodged report with police with regard to theft - Conviction set aside

MADRAS HIGH COURT

Before :- K. Mohan Ram, J.
Crl. Rev. Case No. 267 of 2008 and M.P. No. 2 of 2008. D/d. 14.10.2008.

Kalavally - Petitioner
Versus
Parthasarathy - Respondent

For the Petitioner :- Mr. K. Sakthivel and Mr. S. Vijayakumar, Advocates.
For the Respondent :- Mr. V. Chandrakanthan, Advocate.

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Madras High Court Judgments


JUDGMENT

K. Mohan Ram, J. - The petitioner in the above Criminal Revision is the accused in C.C. No. 261 of 2004 on the file of the learned Judicial Magistrate No. 1, Tiruvallur and the respondent herein is the complainant therein.
2. The petitioner faced trial for an offence under Section 138 of the Negotiable Instruments Act (hereinafter referred to as 'Act') and
he was found guilty and sentenced to undergo imprisonment till the rising of the Court and to pay a fine of Rs. 5,000/- in default to undergo S.I. for one month and further directed to pay a sum of Rs. 3,29,000/-, being the cheque amount, as compensation to the complainant/respondent herein.
3. The case of the complainant/respondent herein is that the accused/petitioner herein was due Rs. 3,29,000/- to the complainant in business transaction; when the respondent demanded the payment, the petitioner issued the cheque bearing No. 743152, dated 8.3.2004 drawn on Indian Overseas Bank, Nazarathpettai, Poonamallee for a sum of Rs. 3,29,000/-; the cheque was presented for encashment on 11.3.2004; the same was returned unpaid with the endorsement "excess arrangement" on 15.3.2004; the respondent sent a legal notice, dated 29.3.2004 to the petitioner; though notice was received by the petitioner, neither there was any reply nor the cheque amount was paid and thereby, the petitioner has committed an offence punishable under Section 138 of the Act.
4. The defence taken by the petitioner herein was that she did not issue the cheque to the respondent herein; a number of cheques were stolen from her house and in respect of that already a police complaint has been lodged; the cheque said to have been issued in favour of the respondent is not supported by any consideration and the same was not issued by the petitioner.
5. The further case of the petitioner was that the petitioner's husband was a Member of Parliament and belonging to a particular political party and the respondent also belongs to that political party and in that connection he used to come to the house of the petitioner; the petitioner was running a gas agency and the respondent was assisting her in the business also; the petitioner often used to visit Delhi and other places and used to leave signed blank cheques and utilising the confidence reposed on him, the respondent had stolen one such cheque leaf and filled-up the same for a sum of Rs. 3,29,000/- and had presented the same for encashment; there was no business connection between the petitioner and the respondent and the petitioner had not obtained any loan as claimed by the respondent and the respondent is not a man of means and he had no resources to pay the huge amount of Rs. 3,00,000/- as claimed by the respondent.
6. During the course of the trial, the respondent has been examined as P.W.1 and examined one Ram Prasad, who is the Manager of the Bank, as P.W.2 and marked Exs.P1 to P5 and on the side of the petitioner, three witnesses have been examined including the petitioner, who has examined herself as D.W.3 and Exs.D1 and D2 have been marked.
7. The learned counsel for the petitioner made the following submissions :
    a. Though both the Courts below have raised legal presumption under Section 139 of the Act in the light of the petitioner admitting her signature in Ex.P1 cheque, such legal presumption has been rebutted by the petitioner by eliciting certain answers from P.W.1 in his cross-examination but also by going into the witness box as D.W.3 and by examining D.Ws.1 and 2, but such rebuttal evidence has not been properly considered by both the Courts below.
    b. The learned counsel submitted that since the presumption raised against the petitioner had been rebutted by preponderance of probabilities, the Courts below ought to have held that the complainant/respondent herein had not discharged the burden of proof viz., the cheque Ex.P1 was issued by the petitioner in discharge of legally enforceable liability.
    c. The learned counsel further submitted that as laid down by the Apex Court in a recent decision reported in Krishna Janardhan Bhat v. Dattatraya G. Hegde, 2008(1) RCR(Criminal) 695 : 2008(1) RCR(Civil) 498 : 2008(1) RAJ 279 : 2008(1) CTC 433 the existence of legally recoverable debt is not a matter of presumption under Section 139 of the Act and it merely arises a presumption in favour of a holder of the cheque that the same has been issued for discharge of any debt or other liability and this legal principle has not been applied by both the Courts below to the case on hand.
    d. The learned counsel further submitted that the respondent had not specifically stated the nature of the transaction which lead to the payment of the cheque amount. He further submitted that admittedly, the respondent herein had not obtained any written instrument as security or atleast a receipt evidencing the payment of a sum of Rs. 3,00,000/- said to have been lent by the respondent. He also submitted that the Courts below failed to notice that ordinarily, in terms of Section 269-SS of the Income Tax Act any amount taken by way of any loan of more than Rs. 20,000/- is to be made by way of account payee cheque only. But admittedly, in this case, the loan said to have been advanced by the respondents to the petitioner was only by cash, which according to the learned counsel, is unbelievable.
    e. The learned counsel further submitted that though both the Courts below have extracted the evidence of the witnesses, they have failed to either appreciate or objectively consider such evidence and evaluate the same regarding its acceptability or otherwise. The Courts below simply extracted the evidence and have concluded that the offence under Section 138 of the Act has been proved since all the five ingredients necessarily to constitute the offence under Section 138 of the Act have been established.
    f. The learned counsel further submitted that since both the Courts below have failed to decide the case by applying the correct legal principles as laid down by the Apex Court, the judgments of the Courts below are liable to be set aside.
8. In support of his contentions, the learned counsel besides relying on Krishna Janardhal Bhat v. Dattatraya G. Hegde, 2008(1) RCR(Criminal) 695 : 2008(1) RCR(Civil) 498 : 2008(1) RAJ 279 : 2008(1) CTC 433, also relied on the decisions reported in John K. John v. Tom Varghese & Another, 2007(4) RCR(Criminal) 807 : 2007(4) RCR(Civil) 724 : 2007(5) RAJ 676 : 2007 AIR SCW 6736 and Lakshmi Srinivas Savings & Chit Funds Syndicate Pvt. Ltd., rep. by its Present Foreman, N. Sathiyam v. S. Bhojarajan, 2007(1) RCR(Criminal) 907 : 2007(1) CTC 291.
9. Per contra, Mr. V. Chandrakanthan, learned counsel for the respondent submitted that both the Courts below have applied the correct legal principles to the facts of the case and have fully considered the evidence on record.
10. The learned counsel submitted that since the accused had admitted her signature in Ex.P1-Cheque, the mandatory presumption required to be raised in terms of Sections 118(a) and 139 of the Act, has been rightly raised in favour of the complainant/respondent and as such there is no irregularity or illegality in raising such legal presumption. The learned counsel submitted that such legal presumption has not been rebutted by the petitioner by adducing acceptable evidence. The learned counsel submitted that since the presumption raised under Sections 118(a) and 139 of the Act are mandatory presumptions, the burden on the accused person would not be light as one cannot be held to be discharged merely by reason of the fact that the explanation offered by the accused is reasonable and probable. According to the learned counsel the presumption has to be rebutted by 'proof' and not by a bare explanation, which is merely plausible and unless the explanation is supported by proof, the mandatory presumption created by the provision cannot be said to be rebutted.
11. In support of the above said contentions, the learned counsel for the respondent relied upon the following decisions :
    a. Y. Sreelatha @ Roja v. Mukanchand Bothra, 2002(2) RCR(Criminal) 253 : 2002(1) CTC 530 : 2002(1) LW (Crl.) 271;
    b. K.N. Beena v. Muniyappan and another, 2001(4) RCR(Criminal) 545 : 2001(4) CTC 382 : 2001 Crl.L.J. 4745;
    c. M.S. Narayana Menon alias Mani v. State of Kerala and another, 2006(3) RCR(Criminal) 504 : 2006(2) Apex Criminal 531 : 2006(6) SCC 39;
    d. Hiten P. Dalal v. Bratindranath Banerjee, 2001(3) RCR(Criminal) 460 : 2001(6) SCC 16; and
    e. Mallavarapu Kasivisweswara Rao v. Thadikonda Ramulu Firm & Others, 2008(3) RCR(Criminal) 205 : 2008(3) RCR(Civil) 336 : 2008(4) RAJ 54 : 2008(8) SCALE 680.
12. I have carefully considered the submissions made on either side and perused the materials available on record.
13. In the decision reported in Krishna Janardhal Bhat v. Dattatraya G. Hegde, 2008(1) CTC 433, after referring to a number of decisions of the Apex Court, the Apex Court in paragraphs 21-26, has observed as under :
    "21. The Proviso appended to the said Section provides for compliance of legal requirements before a Complaint Petition can be acted upon by a Court of law. Section 139 of the Act merely raises a presumption in regard to the second aspect of the matter. Existence of legally recoverable debt is not a matter of presumption under Section 139 of the Act. It merely raises a presumption in favour of a holder of the cheque that the same has been issued for discharge of any debt or other liability.
    22. The Courts below, as noticed hereinbefore, proceeded on the basis that Section 139 raises a presumption in regard to existence of a debt also. The Courts below, in our opinion, committed a serious error in proceeding on the basis that for proving the defence the accused is required to step into the witness box and unless he does so he would not be discharging his burden. Such an approach on the part of the Courts, we feel, is not correct.
    23. An accused for discharging the burden of proof placed upon him under a statute need not examine himself. He may discharge his burden on the basis of the materials already brought on records. An accused has a constitutional right to maintain silence. Standard of proof on the part of an accused and that of the prosecution in a Criminal Case is different.
    24. In Bharat Barrel & Drum Manufacturing Company v. Amin Chand Payrelal, 1999(2) RCR(Civil) 615 : 1999(3) SCC 35. interpreting Section 118(a) of the Act, this Court opined :
    "Upon consideration of various judgments as noted hereinabove, the position of law which emerges is that once execution of the promissory note is admitted, the presumption under Section 118(a) would arise that it is supported by a consideration. Such a presumption is rebuttable. The defendant can prove the non-existence of a consideration by raising a probable defence. If the defendant is proved to have discharged the initial onus of proof showing that the existence of consideration was improbable or doubtful or the same was illegal, the onus wold shift to the plaintiff who will be obliged to prove it as a matter of fact and upon its failure to prove would disentitle him to the grant of relief on the basis of the negotiable instrument. The burden upon the defendant of proving the non-existence of the consideration can be either direct or by bringing on record the preponderance of probabilities by reference to the circumstances upon which he relies. In such an event, the plaintiff is entitled under law to rely upon all the evidence led in the case including that of the plaintiff as well. In case, where the defendant fails to discharge the initial onus of proof by showing the non-existence of the consideration, the plaintiff would invariably be held entitled to the benefit of presumption arising under Section 118(a) in his favour. The Court may not insist upon the defendant to disprove the existence of consideration by leading direct evidence as the existence of negative evidence is neither possible nor contemplated and even if led, is to be seen with a doubt".
    25. Furthermore, whereas prosecution must prove the guilt of an accused beyond all reasonable doubt, the standard of proof so as to prove a defence on the part of an accused is preponderance of "probabilities". Inference of preponderance of probabilities can be drawn not only from the materials brought on records by the parties but also by reference to the circumstances upon which he relies.
    26. A statutory presumption has an evidentiary value. The question as to whether the presumption whether stood rebutted or not, must, therefore, be determined keeping in view the other evidences on record. For the said purpose, stepping into the witness box by the appellant is not imperative. In a case of this nature, where the chances of false implication cannot be ruled out, the background fact and the conduct of the parties together with their legal requirements are required to be taken into consideration."
14. Again in the same judgment, the Apex Court in Paragraphs 33 and 34 has laid down as under :
    "33. But, we may at the same time notice the development of law in this area in some jurisdictions. The presumption of innocence is a human right. (See Narender Singh & Anr. v. State of M.P., 2004(10) SCC 699Ranjitsing Brahmajeetsing Sharma v. State of Maharashtra and Anr., 2005(2) Apex Criminal 389 : 2005(5) SCC 294 and Rajesh Ranjan Yadav @ Pappu Yadav v. CBI through its Director, 2007(1) RCR(Criminal) 166 : 2006(3) Apex Criminal 700 : 2007(1) SCC 70). Article 6(2) of the European Convention on Human Rights provides :
    "Everyone charged with a criminal offence shall be presumed innocent until proved guilty according to law."
Although India is not bound by the aforementioned Convention and as such it may not be necessary like the countries forming European countries to bring common law into land with the Convention, a balancing of the accused rights and the interest of the society is required to be taken into consideration. In India, however, subject to the statutory interdicts, the said principle forms the basis of criminal jurisprudence. For the aforementioned purpose the nature of the offence, seriousness as also gravity thereof may be taken into consideration. The Courts must be on guard to see that merely on the application of presumption as contemplated under Section 139of the Negotiable Instruments Act, the same may not lead to injustice or mistaken conviction. It is for the aforementioned reasons that we have taken into consideration the decisions operating in the field where the difficulty of proving a negative has been emphasized. It is not suggested that a negative can never be proved but there are cases where such difficulties are faced by the accused e.g. honest and reasonable mistake of fact. In a recent article The Presumption of Innocence and Reverse Burdens : A Balancing Duty published in 2007 C.L.J. (March Part) 142 it has been stated :
    "In determining whether a reverse burden is compatible with the presumption of innocence regard should also be had to the pragmatics of proof. How difficult would it be for the prosecution to prove guilt without the reverse burden ? How easily could an innocent defendant discharge the reverse burden ? But Courts will not allow these pragmatic considerations to override the legitimate rights of the defendant. Pragmatism will have greater sway where the reverse burden would not post the risk of great injustice; where the offence is not too serious or the reverse burden only concerns a matter incidental to guilt. And greater weight will be given to prosecutorial efficiency in the regulatory environment."
    34. We are not oblivious of the fact that the said provision has been inserted to regulate the growing business, trade, commerce and industrial activities of the country and the strict liability to promote greater vigilance in financial matters and to safeguard the faith of the creditor in the drawer of the cheque which is essential to the economic life of a developing country like India. This, however, shall not mean that the Courts shall put a blind eye to the ground realities. Statute mandates raising of presumption but it stops at that. It does not say how presumption drawn should be held to have rebutted. Other important principles of legal jurisprudence, namely, presumption of innocence as human rights and the doctrine of reverse burden introduced by Section 139 should be delicately balanced. Such balancing acts, indisputably, would largely depend upon the factual matrix of each case, the materials brought on record and having regard to legal principles governing the same."
15. In John K. John v. Tom Varghese & Another, 2007(4) RCR(Criminal) 807 : 2007(4) RCR(Civil) 724 : 2007(5) RAJ 676 : 2007 AIR SCW 6736, the Supreme Court, in paragraph 10, has observed as under :
    "10 . ....................The High Court was entitled to take notice of the conduct of the parties. It has been found by the High Court as of fact that the complainant did not approach the Court with clean hands. His conduct was not that of a prudent man. Why no instrument was executed although a huge sum of money was allegedly paid to the respondent was a relevant question which could be posed in the matter. It was open to the High Court to draw its own conclusion therein. Not only no document had been executed, even no interest had been charged."
16. In Lakshmi Srinivas Savings & Chit Funds Syndicate Pvt. Ltd. rep. by its Present Foreman, N. Sathiyam v. S. Bhojarajan, 2007(1) CTC 291, a learned Judge of this Court in paragraphs 12 and 13 has observed as under :
    "12. The last but not least submission made by the learned counsel for the respondent/accused is also with all force, namely, that the respondent/accused has rebutted the presumption contemplated under Section 139 of the Act by placing reliance on the answers elicited from P.W.1 as well as by circumstances of preponderance of probabilities. As rightly pointed out by the learned counsel for the respondent/accused, P.W.1 has categorically stated in his cross that he was totally unaware about the transaction took place between the accused and the complainant-Company and it is further admitted by P.W.1 that he cannot even state that on which date an amount of Rs. 1,00,000/- was given as a loan to the accused.
    13. The Hon'ble Supreme Court of India has held in a recent decision in M.S. Narayana Menon @ Mani v. State of Kerala, 2006(3) CTC 730 that onus of the accused in Criminal Case is not as heavy as that of prosecution and he may be compared with defendant in Civil Case and further held that the rebuttal of the presumption contemplated under Section 139 requires only probable defence and standard of proof is preponderance of probabilities.
17. In the decision reported in Y. Sreelatha @ Roja v. Mukanchand Bothra, 2002(1) CTC 530 : 2002(1) LW (Crl.) 271, in paragraph 31, the learned Judge of this Court observed as under :
    "31. The words "unless the contrary is proved" contained in Sections 118 and 139 of the Negotiable Instruments Act would make it clear that the presumption has to be rebutted by 'proof' and not by a bare explanation, which is merely plausible. Unless the explanation is supported by proof, the mandatory presumption created by the provision cannot be said to be rebutted."
18. In the decision reported in K.N. Beena v. Muniyappan and another, 2001(4) CTC 382 : 2001 Crl.L.J. 4745 in paragraphs 6 and 7, the Apex Court has observed as under :
    "6. .......... Thus in Complaints under Section 138, the Court has to presume that the cheque had been issued for a debt or liability. This presumption is rebuttable. However, the burden of proving that a cheque had not been issued for a debt or liability is on the accused. This Court in the case of Hiten P. Dalal v. Bratindranath Banerjee, 2001(6) SCC 16 has also taken an identical view.
    7. In this case admittedly the 1st respondent has led no evidence except some formal evidence. The High Court appears to have proceeded on the basis that the denials/averments in his reply dated 21st May 1993 were sufficient to shift the burden of proof onto the Appellant/Complainant to prove that the cheque was issued for debt or liability. This is an entirely erroneous approach. The 1st respondent had to prove in the trial, by leading cogent evidence, that there was no debt or liability. The 1st respondent not having led any evidence could not be said to have discharged the burden cast on him. The 1st respondent not having discharged the burden of proving that the cheque was not issued for a debt or liability, the conviction as awarded by the Magistrate was correct. The High Court erroneously set aside that conviction."
19. In the decision reported in M.S. Narayana Menon alias Mani v. State of Kerala and another, 2006(3) CTC 730 : 2006(6) SCC 39, the Apex Court, in paragraphs 36, 38 and 41, observed as under :
    "36. It was for the appellant only to discharge the initial onus of proof. He was not necessarily required to disprove the prosecution case. Whether in the given facts and circumstances of a case, the initial burden has been discharged by an accused would be a question of fact. It was a matter relating to appreciation of evidence.
    38. If for the purpose of a civil litigation, the defendant may not adduce any evidence to discharge the initial burden placed on him, a "fortiori" even an accused need not enter into the witness box and examine other witnesses in support of his defence. He, it will repetition to state, need not disprove the prosecution case in its entirety as has been held by the High Court.
    41........... Therefore, the rebuttal does not have to be conclusively established but such evidence must be adduced before the Court in support of the defence that the Court must either believe the defence to exist or consider its existence to reasonably probable, the standard of reasonability being that of the 'prudent' man."
20. In Hiten P. Dalal v. Bratindranath Banerjee, 2001(3) CTC 243 2001 (6) SCC 16, the Supreme Court has observed that in view of Section 3 of the Evidence Act, the rebuttal does not have to be conclusively established but such evidence must be adduced before the Court in support of the defence that the Court must either believe the defence to exist or consider its existence to be reasonably probable, the standard of reasonability being that of the "prudent man".
21. The Apex Court in the decision reported in Mallavarapu Kasivisweswara Rao v. Thadikonda Ramulu Firm & Others, 2008(8) SCALE 680, has relied upon the paragraph 12 of the Judgment reported in Bharat Barrel & Drum Manufacturing Company v. Amin Chand Pyarelal, 1999(1) CTC 497 (S.C.), which has been extracted supra, and therefore, the same is not reproduced again.
22. Now it has to be considered whether the Courts below have properly understood the legal principles to be applied to the facts of the case and whether such legal principles have properly been applied. Further, it has to be considered whether the Courts below have either appreciated or objectively considered the evidence available on record and evaluated the same regarding its acceptability or otherwise.
23. As rightly contended by the learned counsel for the respondent, since the accused/petitioner herein has admitted her signature in Ex.P1-cheque, the mandatory legal presumption arising under Sections 118(a) and 139 of the Act has to be drawn in favour of the complainant/respondent herein and hence, the Courts below have rightly drawn such presumption in favour of the respondent.
24. The learned counsel for the respondent further contends that such legal presumption had not been rebutted by the petitioner by acceptable evidence, since the petitioner had not proved the defence taken by her and has not proved the repayment of the amount borrowed under Ex.P1-cheque. Whereas the contention of the learned counsel for the petitioner is that though several vital admissions have been elicited from P.W.1, the respondent herein, during the course of his cross-examination and through the evidence of D.Ws.1 to 3, it has been established beyond doubt that the respondent is not a man of means and he was not possessed of enough resources to advance a huge sum of Rs. 3.00 lakhs as loan to the petitioner and by establishing preponderance of probabilities, the petitioner has rebutted the legal presumption arising in favour of the respondent, the same has not been either considered or appreciated by the Courts below and thereby, they have committed error of law resulting in miscarriage of justice.
25. The aforesaid contention of the learned counsel for the petitioner merits acceptance when the evidence on record is perused and considered.
26. In Ex.P2 legal notice issued by the respondent to the petitioner, it is stated as follows :
    "That you issued the following cheque payable to my client in regard to the business transaction."
In the Complaint it is alleged as under :
    "The accused is due Rs. 3,29,000/- to the complainant in business transactions."
In his chief-examination, P.W.1 has stated that he had given a sum of Rs. 3,00,000/- as loan in connection with a business transaction and has further given the details of date and amount of the cheque. It is pertinent to point out that in none of the above, the respondent had stated on what date the sum of Rs. 3,00,000/- was advanced as loan and for what purpose it was advanced. Admittedly, it is not the case of the respondent that the petitioner gave any receipt or executed any document in favour of the respondent acknowledging the receipt of the loan amount or undertaking to repay the same.
27. The specific defence taken by the petitioner is that she had not borrowed any amount from the respondent; she had not issued any cheque in favour of the respondent; there was no business transaction between the petitioner and the respondent; the respondent is a man of no means; the respondent is known to her husband, who was an Ex-M.P. and both of them belong to the same political party and in that connection, the respondent used to come to their house and he used to help her in gas agency business and as she used to go to Delhi and other places, she was in the habit of leaving blank signed cheques to be used in the course of business and taking advantage of the same, the respondent had stolen one such cheque leaf and used the same and foisted the case.
28. It is the further case of the petitioner that a police Complaint had been lodged against the respondent and the same was pending. To establish the said defence, pertinent questions have been put to P.W.1 during the course of his cross-examination and vital admissions have been elicited from him; besides that D.Ws. 1 and 2 have been examined and the petitioner herself has gone to the witness box and deposed as D.W.3.
29. It is the further case of the petitioner that the respondent, who is a permanent resident of Nasarathpet, Poonamallee, has wrongly given his address in Ex.P.3 legal notice and in the complaint as if he is residing at No. 52, Nethaji Road, Tiruvallur. P.W.1 in his cross-examination has admitted that he has not produced any document to show that he is residing at No. 52, Nasarathpet, Tiruvallur and the address given by him is that of the address of the brother of his advocate and he is having a bank account with Canara Bank, Poonamallee. He has further stated in his cross-examination that he is doing quarry business by obtaining licence from the Collector; he was doing quarry business in 2000; he has denied the suggestion that he is a jobless politician; he has denied that the petitioner's husband is an Ex.M.P.; he has categorically stated that it is not possible for him to state his yearly income; he has stated that he cannot remember as to on which date and month he paid the money to the petitioner, but it was in the year 2001; he had not maintained accounts regarding his income in 2001; since he was doing business, he had that amount; he is not paying any income tax; till the date of issue of the cheque, the petitioner had paid interest; he does not know as to who wrote the cheque; he does not know whether the accused or her agents wrote the cheque. He has further stated in his cross-examination that on the date on which he advanced the loan, he was not carrying on any business, but he got the money from the business, which he was carrying on earlier; he has categorically stated that it is not possible for him to produce the accounts to prove that he was carrying on business; he has stated that he paid the money from his house; he has admitted that in respect of the cheque in question, a police complaint was lodged and he was enquired; he has admitted that he is having a house at Nasarathpet and he stayed at Tiruvallur when he issued notice; it has been specifically suggested to P.W.1 that only to suppress the fact that he had misused the cheque, he had given a wrong address in his notice; but the said suggestion has been denied by him; he has further stated in his cross-examination that when Ex.P1 cheque was issued a sum of Rs. 30,000/-, being interest for ten months, was due and on that date a sum of Rs. 1000/- was paid leaving out the balance interest of Rs. 29,000/-; he has also admitted that the said details have not been stated either in the legal notice or in the complaint; it has been suggested to P.W.1 since the accused/petitioner is richer than the respondent, there was no necessity for her to obtain any loan from the respondent but the respondent had not denied such suggestion but he has only stated that he does not know about that; he has gone to the extent of stating that he does not know whether the husband of the petitioner is an Ex.M.P.
30. P.W.2, the Manager of the Canara Bank, Poonamallee Branch has deposed about the return of Ex.P1 cheque with an endorsement 'Exceeds arrangement'; he has deposed that the service area of the bank is Poonamallee and not Tiruvallur; he has stated that as per the bank records, the respondent's address is at Nasarathpet; he has further stated that Ex.P1 is a bearer cheque.
31. On the side of the accused/petitioner herein, one Sridharan has been examined as D.W.1; he has deposed that the petitioner's husband is an Ex.M.P.; he belongs to Congress party; the complainant also belongs to Congress party and he resides at Poonamallee; he knows the complainant for 14 years; the complainant used to come to the house of the accused frequently; except party work he had no other work; the complainant was assisting the accused in her business; to his knowledge, the complainant is not having any residence at Tiruvallur and to his knowledge, the complainant is not financially sound to advance a sum of Rs. 3,00,000/- as loan.
32. It is pertinent to point out that on the aforesaid aspects spoken to by D.W.1, no cross-examination has been done; but D.W.1 has been cross-examined on other immaterial aspects; but nothing has been elicited from D.W.1 to discredit his evidence.
33. The petitioner has also examined one Mr. S. Kamaraj as D.W.2; he has deposed that the complainant has no job; since the accused is carrying on a gas agency business, the complainant was attending to some sundry jobs in her office; the complainant has got his own house at Pettai in Poonamallee and except that he is not having any other house; the complainant is not having any other job or business; the complainant used to attend to the bank work of the accused; the complainant is not having any means to advance the loan of Rs. 3,00,000/-. D.W.2 has further stated that about two years back when he and the complainant were in the house of the accused, the accused received a registered post and he was asked to open the cover and read the same; D.W.2 informed that the notice has been sent by one Parthasarathy and when the complainant was asked which Parthasarathy has sent the notice, immediately, the complainant is said to have stated that why he is asked and he had replied that there may be several Parthasarathys at Tiruvallur and why he should be asked and from that date onwards the complainant stopped from coming to the residence or office of the accused.
34. It is pertinent to point out that D.W.2 has not been cross-examined by the complainant on the said evidence tendered by D.W.2. But it has been suggested to D.W.2 that the complainant had arranged loan to the accused in the past from Kandakottam finance and in that connection, the accused had given the cheque to the petitioner and to that suggestion D.W.2 has stated that he is not aware of the same. It is further suggested to D.W.2 that since he is interested in the accused, he is falsely deposing but the said suggestion has been denied by D.W.2. As pointed out above, on the vital aspects of the evidence tendered by D.W.2, no cross-examination has been done. It is not even suggested to D.W.2 that the complainant was carrying on quarry business and he was having sufficient means to advance loan amount of Rs. 3,00,000/- to the accused.
35. As pointed out above, the accused herself has tendered evidence as D.W.3. She has clearly spoken to in detail the defence taken by her. Here again, it is pertinent to point out that no worthwhile cross-examination has been done. Nothing has been elicited during the course of cross-examination of D.W.3 to discredit her testimony. It is not even suggested to D.W.3 that the complainant is a man of means and he was having enough means on the date when he is said to have advanced the loan of Rs. 3,00,000/- to the accused. It has not been suggested that the complainant was carrying on quarry business and from that business he was getting good income and that he had the means to advance the money.
36. The Trial Court even before the considering the defence raised by the accused has recorded a finding of guilt merely basing reliance on the fact that the accused admitted her signature in Ex.P1-cheque and in spite of receipt of legal notice, the amount has not been repaid and the same has been spoken to by P.W.1. Having recorded such a finding, the Trial Court, thereafter proceeds to refer to the evidence on record, but failed to appreciate the same in a proper perspective and therefore, the judgment of the Trial Court cannot be sustained.
37. It is unfortunate that though the Trial Court has elaborately referred to the evidence on record and the written arguments submitted by the complainant and the accused, it has failed to consider the evidence objectively and appreciate the same and draw necessary inference from the same. The Trial Court has not even discussed the above said vital admissions made by P.W.1 in his cross-examination and the failure of the complainant to put proper questions during the cross-examination of D.Ws.1 to 3, etc.
38. Without appreciating the evidence on record it would not have been possible for the Trial Court to consider the question as to whether the accused has rebutted the presumption arising under Section 139 of the Act. The same mistake has been committed by the Lower Appellate Court also. The Lower Appellate Court has miserably failed even to refer, appreciate and consider the evidence on record. The non-consideration of the evidence on record by the Lower Appellate Court has resulted in miscarriage of justice. The Lower Appellate Court has not even understood the law to be applied to the facts of this case. Both the Courts below have failed to see that once the drawer of the cheque admits its execution, Section 139 of the Act merely raises a presumption that the negotiable instrument is supported by consideration but the existence of legally recoverable debt is not a matter of presumption under Section 139 of the Act.
39. The Lower Appellate Court has observed that to the police complaint said to have been lodged by the accused, no proof has been produced overlooking the fact that P.W.1 himself in his cross-examination has admitted that on the complaint lodged by the accused, he was enquired by the police. The Lower Appellate Court in its judgment observed as under :
    "In this case, the signature on Ex.P1 is admitted by the appellant/accused and therefore it is proved that the cheque-Ex.P1 was issued by the accused appellant in favour of the complainant to discharge his liability ........ The cheque was obtained by the complainant with the signature of the appellant. But for the same no oral or documentary evidence has been let in. But is sufficiently explained by the respondent that the appellant has not paid the amount for which the appellant has issued a cheque which was returned by the bank when presented. To escape from the liability, the plea towards the cheque with the signature of the appellant by the respondent is waste which is not sufficiently proved. The appellant has not come forward to prove her case in any manner whereas the respondent has sufficiently proved that the appellant has failed to repay the amount............ In this case the appellant/accused has not sufficiently proved her entire payment to the complainant through sufficient oral or documentary evidence."
40. The very approach of the Lower Appellate Court is erroneous. The Lower Appellate Court had utterly failed to consider the defence taken by the accused in the case. Similarly, it has failed to consider the question whether the accused has rebutted the legal presumption arising under Section 139 of the Act.
41. The above discussion of mine pertaining to the oral evidence on record makes it abundantly clear that the accused has rebutted the legal presumption arising under Section 139 of the Act. In this context, it will be useful to refer to the observation made by Subba Rao, J., as the learned Chief Justice then was, in the decision reported in Kundan Lal Rallaram v. Custodian, Evacuee Property, AIR 1961 Supreme Court 1316, which was referred to by the Apex Court in the decision reported in M.S. Narayana Menon alias Mani v. State of Kerala and another, 2006(3) CTC 730 : 2006(6) SCC 39, which reads as under :
    "In Kundan Lal Rallaram v. Custodian, Evacuee Property, Subba Rao, J., as the learned Chief Justice then was, held that while considering the question as to whether the burden of proof in terms of Section 118 had been discharged or not, relevant evidence cannot be permitted to be withheld. If a relevant evidence is withheld, the Court may draw a presumption to the effect that if the same was produced, it might have gone unfavourable to the plaintiff. Such a presumption was itself held to be sufficient to rebut the presumption arising under Section 118 of the Act stating : (AIR p. 1319, Para 5)
    "Briefly stated, the burden of proof may be shifted by presumptions of law or fact, and presumptions of law or presumptions of fact may be rebutted not only by direct or circumstantial evidence but also by presumptions of law or fact. We are not concerned here with irrebuttable presumptions of law."
42. As laid down by the Apex Court in a catena of decisions referred to above, the burden upon the accused of proving the non-existence of the consideration can be either by direct or by bringing on record the preponderance of probabilities by reference to the circumstances upon which he relies. In such an event, the accused is entitled under law to rely upon the evidence led in the case including that of the complainant as well.
43. In case, where the accused fails to discharge initial onus of proof by showing the non-existence of the consideration, the complainant would invariably be held entitled to the benefit of presumption arising under Section 118(a) of the Act in his favour. The Court may not insist upon the accused to disprove the existence of consideration by leading direct evidence as the existence of negative evidence is neither possible nor contemplated and even if led, is to be seen with a doubt.
44. In this case, the evidence on record makes it abundantly clear that the accused has proved the defence taken by her by preponderance of probabilities. Inference of preponderance of probabilities can be drawn not only from the materials brought on records by the parties but also by reference to the circumstances upon which he relies. In this case, the accused has elicited vital admissions during the course of cross-examination of P.W.1. From the evidence of D.Ws.1 and 2, which in the considered view of this Court, has not been discredited, coupled with the fact that the complainant had not produced any account books to show that he was carrying on quarrying business as claimed by him and no documentary proof has been produced to prove his means it should be held that the complainant has failed to prove that the cheque was given in discharge of a legally recoverable liability. When the defence taken by the accused is that the complainant was a man of no means, it is the bounden duty of the complainant to prove by acceptable evidence that he had the means on the date on which he is alleged to have advanced the loan to the accused. In this case, admittedly, the accused had not given any receipt or executed any instrument in favour of the complainant evidencing the payment of the loan amount said to have been advanced by the complainant to the accused. When a huge amount of Rs. 3,00,000/- is said to have been paid, normally, a prudent man would have obtained a document evidencing such payment. But the complainant had failed to get such document. The complainant had not explained as to why such document was not obtained from the accused.
45. The contention of the learned counsel for the respondent that the defence taken by the accused shall be proved beyond doubt cannot be countenanced. The said contention of the learned counsel is opposed to the legal principles laid down by the Apex Court in M.S. Narayana Menon alias Mani v. State of Kerala and another, 2006(3) CTC 730 : 2006(6) SCC 39 and Hiten P. Dalal v. Bratindranath Banerjee, 2001(3) CTC 243 : 2001(6) SCC 16. In the said decisions, it has been clearly laid down that in view of Section 3 of the Evidence Act, the rebuttal does not have to be conclusively established but such evidence must be adduced before the Court in support of the defence that the Court must either believe the defence to exist or consider its existence to be reasonably probable, the standard of reasonability being that of the 'prudent man.'
46. It has to be pointed out that the decisions relied upon the by the respondent would only lend support to the case of the petitioner rather than supporting the case of the respondent. It is pertinent to point out that the Courts must be on guard to see that merely on the application of presumption as contemplated under Section 139 of the Act, the same may not lead to injustice or mistaken conviction.
47. Since as pointed out above, both the Courts below have failed to apply the aforesaid correct legal principles to the facts of this case and failed to even consider the evidence on record, this Court is constrained to set aside the judgment of conviction rendered by the Courts below. The petitioner is acquitted of the charge under Section 138 of the Act and the Revision is allowed. Connected M.P. is closed. The fine amount, if any, paid by the petitioner shall be returned to the petitioner by the Trial Court.
Petition allowed.
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